Note: All comparisons are versus the same period a year ago and
exclude Special Items unless noted. System sales and operating profit
figures on this page exclude foreign currency translation; restaurant
margin and operating margin figures are as reported.

SUMMARY FINANCIAL TABLE

Fourth Quarter

Full Year

2015

2014

% Change

2015

2014

% Change

EPS Excluding Special Items

$0.68

$0.61

11%

$3.18

$3.09

3%

Special Items Gain/(Loss)1

$(0.05)

$(0.81)

NM

$(0.26)

$(0.77)

NM

EPS

$0.63

$(0.20)

NM

$2.92

$2.32

26%

1 See Reconciliation of Non-GAAP Measurements to GAAP
Results for further detail of Special Items. Special Items for
2015 are primarily related to charges for the refranchising of
certain international markets, U.S. refranchising gains and
charges associated with the agreement reached with KFC U.S.
franchisees. Special Items for 2014 are primarily related to the
impairment of Little Sheep and U.S. refranchising gains.

GREG CREED COMMENTS

Greg Creed, CEO, said, “I’m pleased with the positive sales momentum we
generated across the majority of Yum! in the fourth quarter. KFC China,
for example, grew same-store sales 6% in the last quarter of 2015.
Outside of China, each of our brand divisions grew same-store sales on a
one-year and a two-year basis. Our U.S. results were particularly strong
on a two-year basis, with growth of 2% at Pizza Hut, 8% at KFC and 10%
at Taco Bell.

New-unit development continues to be a bright spot for our company. We
added more than 2,300 new units globally in 2015. This year we expect to
open nearly 2,400 new restaurants, which means we’re opening over six
new restaurants a day, laying the groundwork for future growth. With all
of this in mind, we are reiterating the guidance we initially gave in
December. Given the results we have seen year-to-date and the plans we
have laid out for each of the brands, we're confident in our ability to
deliver 10% operating profit growth in constant currency in 2016.

2016 will be a transformational year for Yum! as we are on track to
complete the spin-off of our China Division, ultimately creating two
powerful, independent, focused growth companies. The fundamental goal of
Yum!, however, is unchanged. We are 100% dedicated to building and
strengthening KFC, Pizza Hut and Taco Bell all around the world, as
strong brands are critical to delivering sustained growth and creating
shareholder value over the long term."

CHINA DIVISION

Fourth Quarter

Full Year

% Change

% Change

2015

2014

Reported

Ex F/X

2015

2014

Reported

Ex F/X

System Sales Growth

+3

+7

Even

+2

Same-Store Sales Growth (%)

+2

(16)

NM

NM

(4)

(5)

NM

NM

Franchise & License Fees ($MM)

37

33

+12

+16

120

113

+7

+9

Restaurant Margin (%)

11.4

7.1

4.3

4.3

15.9

14.8

1.1

1.0

Operating Profit ($MM)

96

32

+195

+207

757

713

+6

+8

China Division system sales increased 7% for the quarter and 2%
for the year, excluding foreign currency translation.

KFC same-store sales increased 6% for the quarter and declined 4%
for the year.

Pizza Hut Casual Dining same-store sales declined 8% for the
quarter and 5% for the year.

China Division opened 384 new restaurants in the quarter. For the
year, China Division opened 743 new restaurants, including 351 at KFC,
280 at Pizza Hut Casual Dining and 75 at Pizza Hut Home Service.

Foreign currency translation negatively impacted operating profit by
$4 million for the quarter and $15 million for the year.

KFC DIVISION

Fourth Quarter

Full Year

% Change

% Change

2015

2014

Reported

Ex F/X

2015

2014

Reported

Ex F/X

Restaurants

14,577

14,197

+3

NA

14,577

14,197

+3

NA

System Sales Growth

(5)

+6

(4)

+7

Same-Store Sales Growth (%)

+3

+4

NM

NM

+3

+3

NM

NM

Franchise & License Fees ($MM)

263

277

(5)

+7

842

873

(4)

+7

Restaurant Margin (%)

14.7

13.8

0.9

0.8

14.8

13.3

1.5

1.4

Operating Profit ($MM)

206

221

(7)

+7

677

708

(4)

+8

Operating Margin (%)

22.4

22.0

0.4

0.3

23.0

22.2

0.8

0.4

KFC Division system sales increased 6% for the quarter and 7%
for the year, excluding foreign currency translation.

% Change

Int'l Emerging Markets

Int'l Developed Markets

U.S.

FourthQuarter

Full Year

FourthQuarter

Full Year

FourthQuarter

Full Year

System Sales Growth (Ex F/X)

+10

+11

+6

+6

+1

+2

Same-Store Sales Growth

+2

+3

+3

+3

+3

+4

KFC Division opened 370 new international restaurants during the
quarter.

For the year, KFC Division opened 705 new international
restaurants in 85 countries, including 524 units in emerging
markets. 85% of these new units were opened by franchisees.

Operating margin increased 0.4 percentage points for the quarter and
0.8 percentage points for the year driven by same-store sales growth
and new-unit development.

Foreign currency translation negatively impacted operating profit by
$31 million for the quarter and $85 million for the year, as
approximately 90% of division profits are generated outside the U.S.

KFC MARKETS1

Percent of KFCSystem Sales 2

SYSTEM Sales Growth Ex F/X

Fourth Quarter (%)

Full Year (%)

Emerging Markets

Asia (e.g. Malaysia, Indonesia, Philippines)

8%

+8

+6

Africa

6%

+4

+9

Latin America (e.g. Mexico, Peru)

6%

+7

+8

Middle East / North Africa

6%

+3

+3

Russia

5%

+35

+42

Thailand

3%

+6

+6

Continental Europe (e.g. Poland)

3%

+12

+13

Developed Markets

U.S.

24%

+1

+2

Australia

10%

+7

+9

Asia (e.g. Japan, Korea, Taiwan)

9%

+7

+5

U.K.

9%

+2

+3

Continental Europe (e.g. France, Germany)

7%

+11

+9

Canada

3%

+4

+2

Latin America (e.g. Puerto Rico)

1%

+3

+3

1 See website www.yum.com
under tab "Investors" for a list of the countries within each of
the markets.

2 Reflects Full Year 2015.

PIZZA HUT DIVISION

Fourth Quarter

Full Year

% Change

% Change

2015

2014

Reported

Ex F/X

2015

2014

Reported

Ex F/X

Restaurants

13,728

13,602

+1

NA

13,728

13,602

+1

NA

System Sales Growth

(2)

+2

(2)

+2

Same-Store Sales Growth (%)

+1

Even

NM

NM

+1

(1)

NM

NM

Franchise & License Fees ($MM)

169

167

Even

+5

536

541

(1)

+3

Restaurant Margin (%)

9.6

6.4

3.2

2.4

9.7

8.2

1.5

1.0

Operating Profit ($MM)

81

80

+3

+6

289

295

(2)

+1

Operating Margin (%)

23.4

22.4

1.0

0.6

25.2

25.6

(0.4)

(0.6)

Pizza Hut Division system sales increased 2% for both the
quarter and the year, excluding foreign currency translation.

% Change

Int'l Emerging Markets

Int'l Developed Markets

U.S.

FourthQuarter

Full Year

FourthQuarter

Full Year

FourthQuarter

Full Year

System Sales Growth (Ex F/X)

+7

+7

Even

+1

+2

+1

Same-Store Sales Growth

+3

+3

(1)

(1)

+2

+1

Pizza Hut Division opened 223 new international restaurants during the
quarter.

For the year, Pizza Hut Division opened 429 new international
restaurants in 64 countries, including 243 units in emerging
markets. 92% of these new units were opened by franchisees.

Operating margin increased 1.0 percentage point for the quarter led by
an increase of 3.2 percentage points in restaurant margin. For the
year, operating margin decreased 0.4 percentage points driven by
strategic investments in international G&A.

Foreign currency translation negatively impacted operating profit by
$2 million for the quarter and $8 million for the year.

PIZZA HUT MARKETS1

Percent of PizzaHut System Sales2

SYSTEM Sales Growth Ex F/X

Fourth Quarter (%)

Full Year (%)

Emerging Markets

Latin America (e.g. Mexico, Peru)

7%

+9

+9

Asia (e.g. Malaysia, Indonesia, Philippines)

5%

+5

+4

Middle East / North Africa

5%

+5

+6

Continental Europe (e.g. Poland)

1%

+14

+11

Developed Markets

U.S.

55%

+2

+1

Asia (e.g. Japan, Korea, Taiwan)

9%

(2)

(1)

U.K.

7%

+4

+4

Continental Europe (e.g. France, Germany)

5%

+4

+3

Canada

3%

+7

+5

Australia

2%

(12)

(8)

Latin America (e.g. Puerto Rico)

1%

(12)

(4)

1 See website www.yum.com
under tab "Investors" for a list of the countries within each of
the markets.

2 Reflects Full Year 2015.

TACO BELL DIVISION

Fourth Quarter

Full Year

% Change

% Change

2015

2014

Reported

Ex F/X

2015

2014

Reported

Ex F/X

Restaurants

6,400

6,199

+3

NA

6,400

6,199

+3

NA

System Sales Growth

+7

+7

+8

+8

Same-Store Sales Growth (%)

+4

+6

NM

NM

+5

+3

NM

NM

Franchise & License Fees ($MM)

138

130

+7

+7

447

411

+9

+9

Restaurant Margin (%)

23.7

20.6

3.1

3.1

22.3

18.9

3.4

3.4

Operating Profit ($MM)

152

163

(7)

(7)

539

480

+12

+12

Operating Margin (%)

25.0

27.7

(2.7)

(2.7)

27.1

25.8

1.3

1.3

Taco Bell Division system sales increased 7% for the quarter
and 8% for the year.

Taco Bell Division opened 109 new restaurants in the fourth quarter.
For the year, Taco Bell Division opened 276 new restaurants; 87% of
these new units were opened by franchisees.

Restaurant margin increased 3.1 percentage points to 23.7% for the
quarter driven by favorable U.S. commodities and same-store sales
growth. Restaurant margin increased 3.4 percentage points to 22.3% for
the year driven by same-store sales growth.

Operating margin decreased 2.7 percentage points for the quarter
driven by an expected increase in G&A related to incentive
compensation, investment spending on strategic growth and technology
initiatives, legal costs and creation of the Live Más scholarship
program. The majority of the increase is either nonrecurring in nature
or represents investments to sustain positive brand momentum. This was
partially offset by same-store sales growth. For the year, operating
margin increased 1.3 percentage points driven by same-store sales
growth, partially offset by an increase in G&A primarily attributable
to incentive compensation, pension and previously mentioned
investments.

INDIA DIVISION

India Division system sales decreased 9% for the quarter and 5%
for the year, excluding foreign currency translation.

Operating loss was $4 million for the quarter and $19 million for the
year.

During the quarter, we refranchised 86 KFC units, reducing equity
ownership in India from 25% to 15%.

India Units

Q4 2015

% Change2

Restaurants1

811

(3)

KFC

372

(6)

Pizza Hut

Casual Dining

170

(8)

Home Service

262

+7

1 Total includes 7 Taco Bell units.

2 Represents year-over-year change.

SPECIAL ITEMS / SHARE REPURCHASE UPDATE

For the fourth quarter in the U.S., we refranchised 36 Taco Bell units
and sold real estate related to 19 previously refranchised KFC units,
resulting in total proceeds of $75 million. We recorded pre-tax U.S.
refranchising gains of $51 million in Special Items. At the end of the
fourth quarter, our company ownership in the U.S. across our three
branded divisions was 9%.

During the first quarter of 2015, we reached an agreement with our KFC
U.S. franchisees that will give us brand marketing control, as well as
an accelerated path to expanded menu offerings, improved assets and an
enhanced customer experience. In connection with this agreement, we
recognized a Special Items charge of $41 million during the fourth
quarter, primarily related to the funding of investments for new
back-of-house equipment for franchisees.

In the fourth quarter, we repurchased 11.4 million shares totaling
$830 million at an average price of $73. For the year, we repurchased
15.9 million shares totaling $1.2 billion at an average price of $75,
with 420 million shares outstanding as of year end. During 2015, we
reduced our outstanding share count by 14 million. For fiscal year
2016 through February 2, 2016, we repurchased 10.8 million shares
totaling $749 million at an average price of $70.

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's
financial performance and strategies at 9:15 a.m. Eastern Time Thursday,
February 4, 2016. The number is 877/815-2029 for U.S. callers and
706/645-9271 for international callers.

The call will be available for playback beginning at 12:30 p.m. Eastern
Time Thursday, February 4, through midnight Thursday, March 3, 2016.To access the playback, dial 855/859-2056 in the United States
and 404/537-3406 internationally. The playback passcode is 19873670.

The webcast and the playback can be accessed via the internet by
visiting Yum! Brands' website, www.yum.com/investors
and selecting “Q4 2015 Earnings Conference Call” under “Events &
Presentations.”

ADDITIONAL INFORMATION ONLINE

Quarter end dates for each division, restaurant-count details and
definitions of terms are available online at www.yum.com
under “Investors.”

This announcement may contain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. We intend all forward-looking
statements to be covered by the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
generally can be identified by the fact that they do not relate strictly
to historical or current facts and by the use of forward-looking words
such as “expect,” “expectation,” “believe,” “anticipate,” “may,”
“could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,”
“likely,” “will,” “should,” “forecast,” “outlook” or similar
terminology. These statements are based on current estimates and
assumptions made by us in light of our experience and perception of
historical trends, current conditions and expected future developments,
as well as other factors that we believe are appropriate and reasonable
under the circumstances, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements reflect our current expectations, estimates or projections
concerning future results or events, including, without limitation,
statements regarding the intended capital return to shareholders as well
as the related borrowing required to fund such capital return, the
planned separation of the Yum! Brands and Yum! China businesses, the
timing of any such separation, the future earnings and performance as
well as capital structure of Yum! Brands, Inc. or any of its businesses,
including the Yum! Brands and Yum! China businesses on a standalone
basis if the separation is completed. Forward-looking statements are not
guarantees of performance and are inherently subject to known and
unknown risks, uncertainties and assumptions that are difficult to
predict and could cause our actual results to differ materially from
those indicated by those statements. We cannot assure you that any of
our expectations, estimates or projections will be achieved. The
forward-looking statements included in this announcement are only made
as of the date of this announcement and we disclaim any obligation to
publicly update any forward-looking statement to reflect subsequent
events or circumstances. Numerous factors could cause our actual results
and events to differ materially from those expressed or implied by
forward-looking statements, including, without limitation: whether we
are able to return capital to shareholders at the times and in the
amounts currently anticipated, if at all, as well as the corresponding
costs of borrowing to fund such capital return as well as other costs;
whether the separation of the Yum! Brands and Yum! China businesses is
completed, as expected or at all, and the timing of any such separation;
whether the operational and strategic benefits of the separation can be
achieved; whether the costs and expenses of the separation can be
controlled within expectations, including potential tax costs; as well
as other risks. In addition, other risks and uncertainties not presently
known to us or that we currently believe to be immaterial could affect
the accuracy of any such forward-looking statements. All forward-looking
statements should be evaluated with the understanding of their inherent
uncertainty. You should consult our filings with the Securities and
Exchange Commission (including the information set forth under the
captions “Risk Factors” and “Forward-Looking Statements” in our Annual
Report on Form 10-K) for additional detail about factors that could
affect our financial and other results. Reconciliation of non-GAAP
financial measures to the most directly comparable GAAP measures are
included on our website at www.yum.com/investors.

Yum! Brands, Inc., based in Louisville, Kentucky, has over 42,500
restaurants in more than 130 countries and territories. Yum! is ranked
#228 on the Fortune 500 List with revenues of over $13 billion in 2015
and is one of the Aon Hewitt Top Companies for Leaders in North America.
The Company's restaurant brands - KFC, Pizza Hut and Taco Bell - are the
global leaders of the chicken, pizza and Mexican-style food categories.
Outside the United States, the Yum! Brands system opens over five new
restaurants per day on average, making it a leader in international
retail development.

YUM! Brands, Inc.

Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/26/15

12/27/14

B/(W)

12/26/15

12/27/14

B/(W)

Company sales

$

3,339

$

3,383

(1)

$

11,145

$

11,324

(2)

Franchise and license fees and income

612

614

—

1,960

1,955

—

Total revenues

3,951

3,997

(1)

13,105

13,279

(1)

Company restaurant expenses

Food and paper

1,045

1,116

6

3,507

3,678

5

Payroll and employee benefits

797

824

3

2,517

2,579

2

Occupancy and other operating expenses

1,043

1,099

5

3,335

3,425

3

Company restaurant expenses

2,885

3,039

5

9,359

9,682

3

General and administrative expenses

528

473

(11)

1,504

1,419

(6)

Franchise and license expenses

96

51

(88)

242

160

(51)

Closures and impairment (income) expenses

49

505

90

79

535

85

Refranchising (gain) loss

(50

)

(6

)

NM

10

(33

)

NM

Other (income) expense

2

(22

)

NM

(10

)

(41

)

(75)

Total costs and expenses, net

3,510

4,040

13

11,184

11,722

5

Operating Profit (loss)

441

(43

)

NM

1,921

1,557

23

Interest expense, net

35

40

8

134

130

(4)

Income (loss) before income taxes

406

(83

)

NM

1,787

1,427

25

Income tax provision

131

36

NM

489

406

(20)

Net income (loss) - including noncontrolling interests

275

(119

)

NM

1,298

1,021

27

Net income (loss) - noncontrolling interests

—

(33

)

(98)

5

(30

)

NM

Net income (loss) - YUM! Brands, Inc.

$

275

$

(86

)

NM

$

1,293

$

1,051

23

Effective tax rate

32.2

%

(44.1

)%

NM

27.3

%

28.5

%

1.2 ppts.

Basic EPS Data

EPS

$

0.64

$

(0.20

)

NM

$

2.97

$

2.37

25

Weighted average shares used in computation

433

441

2

436

444

2

Diluted EPS Data

EPS

$

0.63

$

(0.20

)

NM

$

2.92

$

2.32

26

Weighted average shares used in computation

439

441

—

443

453

2

Dividends declared per common share

$

0.92

$

0.82

$

1.74

$

1.56

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

CHINA DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/26/15

12/27/14

B/(W)

12/26/15

12/27/14

B/(W)

Company sales

$

2,011

$

1,973

2

$

6,789

$

6,821

—

Franchise and license fees and income

37

33

12

120

113

7

Total revenues

2,048

2,006

2

6,909

6,934

—

Company restaurant expenses

Food and paper

641

660

3

2,159

2,207

2

Payroll and employee benefits

453

463

2

1,386

1,407

2

Occupancy and other operating expenses

686

710

3

2,167

2,198

1

Company restaurant expenses

1,780

1,833

3

5,712

5,812

2

General and administrative expenses

139

132

(5)

397

391

(2)

Franchise and license expenses

5

5

(4)

20

16

(25)

Closures and impairment (income) expenses

42

31

(37)

64

54

(19)

Other (income) expense

(14

)

(27

)

(46)

(41

)

(52

)

(22)

Total costs and expenses, net

1,952

1,974

1

6,152

6,221

1

Operating Profit

$

96

$

32

NM

$

757

$

713

6

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

31.8

33.4

1.6 ppts.

31.8

32.4

0.6 ppts.

Payroll and employee benefits

22.6

23.5

0.9 ppts.

20.4

20.6

0.2 ppts.

Occupancy and other operating expenses

34.2

36.0

1.8 ppts.

31.9

32.2

0.3 ppts.

Restaurant margin

11.4

%

7.1

%

4.3 ppts.

15.9

%

14.8

%

1.1 ppts.

Operating margin

4.7

%

1.6

%

3.1 ppts.

11.0

%

10.3

%

0.7 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/26/15

12/27/14

B/(W)

12/26/15

12/27/14

B/(W)

Company sales

$

655

$

727

(10)

$

2,106

$

2,320

(9)

Franchise and license fees and income

263

277

(5)

842

873

(4)

Total revenues

918

1,004

(9)

2,948

3,193

(8)

Company restaurant expenses

Food and paper

222

254

12

717

809

11

Payroll and employee benefits

155

168

8

497

552

10

Occupancy and other operating expenses

182

206

12

580

651

11

Company restaurant expenses

559

628

11

1,794

2,012

11

General and administrative expenses

122

122

—

386

383

(1)

Franchise and license expenses

26

26

(3)

85

80

(7)

Closures and impairment (income) expenses

6

7

18

8

9

15

Other (income) expense

(1

)

—

NM

(2

)

1

NM

Total costs and expenses, net

712

783

9

2,271

2,485

9

Operating Profit

$

206

$

221

(7)

$

677

$

708

(4)

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

33.8

34.8

1.0 ppts.

34.0

34.8

0.8 ppts.

Payroll and employee benefits

23.7

23.0

(0.7 ppts.)

23.6

23.8

0.2 ppts.

Occupancy and other operating expenses

27.8

28.4

0.6 ppts.

27.6

28.1

0.5 ppts.

Restaurant margin

14.7

%

13.8

%

0.9 ppts.

14.8

%

13.3

%

1.5 ppts.

Operating margin

22.4

%

22.0

%

0.4 ppts.

23.0

%

22.2

%

0.8 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/26/15

12/27/14

B/(W)

12/26/15

12/27/14

B/(W)

Company sales

$

179

$

185

(3)

$

609

$

607

—

Franchise and license fees and income

169

167

—

536

541

(1)

Total revenues

348

352

(1)

1,145

1,148

—

Company restaurant expenses

Food and paper

49

54

9

169

180

6

Payroll and employee benefits

57

59

4

190

188

(1)

Occupancy and other operating expenses

56

60

7

191

189

(1)

Company restaurant expenses

162

173

6

550

557

1

General and administrative expenses

90

81

(9)

266

246

(8)

Franchise and license expenses

14

15

15

39

44

14

Closures and impairment (income) expenses

1

3

48

3

5

29

Other (income) expense

—

—

17

(2

)

1

NM

Total costs and expenses, net

267

272

3

856

853

—

Operating Profit

$

81

$

80

3

$

289

$

295

(2)

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

27.9

29.6

1.7 ppts.

27.8

29.7

1.9 ppts.

Payroll and employee benefits

31.3

31.6

0.3 ppts.

31.1

30.9

(0.2 ppts.)

Occupancy and other operating expenses

31.2

32.4

1.2 ppts.

31.4

31.2

(0.2 ppts.)

9.6

%

6.4

%

3.2 ppts.

9.7

%

8.2

%

1.5 ppts.

Operating margin

23.4

%

22.4

%

1.0 ppts.

25.2

%

25.6

%

(0.4 ppts.)

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year ended

% Change

12/26/15

12/27/14

B/(W)

12/26/15

12/27/14

B/(W)

Company sales

$

470

$

460

2

$

1,541

$

1,452

6

Franchise and license fees and income

138

130

7

447

411

9

Total revenues

608

590

3

1,988

1,863

7

Company restaurant expenses

Food and paper

124

134

8

421

431

2

Payroll and employee benefits

128

127

—

427

414

(3)

Occupancy and other operating expenses

107

104

(3)

350

333

(5)

Company restaurant expenses

359

365

2

1,198

1,178

(2)

General and administrative expenses

88

57

(56)

228

185

(23)

Franchise and license expenses

10

5

NM

22

18

(24)

Closures and impairment (income) expenses

—

1

NM

3

3

(35)

Other (income) expense

(1

)

(1

)

(11)

(2

)

(1

)

NM

Total costs and expenses, net

456

427

(7)

1,449

1,383

(5)

Operating Profit

$

152

$

163

(7)

$

539

$

480

12

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

26.4

29.2

2.8 ppts.

27.3

29.7

2.4 ppts.

Payroll and employee benefits

27.2

27.7

0.5 ppts.

27.7

28.5

0.8 ppts.

Occupancy and other operating expenses

22.7

22.5

(0.2 ppts.)

22.7

22.9

0.2 ppts.

23.7

%

20.6

%

3.1 ppts.

22.3

%

18.9

%

3.4 ppts.

Operating margin

25.0

%

27.7

%

(2.7 ppts.)

27.1

%

25.8

%

1.3 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

Consolidated Balance Sheets

(amounts in millions)

(unaudited)

12/26/2015

12/27/2014

ASSETS

Current Assets

Cash and cash equivalents

$

737

$

578

Accounts and notes receivable, less allowance: $16 in 2015 and $12
in 2014

377

325

Inventories

229

301

Prepaid expenses and other current assets

242

254

Advertising cooperative assets, restricted

103

95

Total Current Assets

1,688

1,553

Property, plant and equipment, net of accumulated depreciation and
amortization of $3,643 in 2015 and $3,584 in 2014

Reconciliation of Non-GAAP Measurements to GAAP Results(amounts
in millions, except per share amounts)(unaudited)

In addition to the results provided in accordance with U.S. Generally
Accepted Accounting Principles ("GAAP") throughout this document, the
Company has provided non-GAAP measurements which present operating
results in 2015 and 2014 on a basis before Special Items. Included in
Special Items are gains/(losses) associated with the refranchising of
equity markets outside the U.S., costs associated with the KFC U.S.
Acceleration Agreement, a loss associated with the planned sale of an
aircraft in China, costs associated with the planned spin-off of the
China business and YUM! recapitalization, U.S. refranchising gains and
the impairment of certain Little Sheep assets in 2014. These amounts are
described in (c), (d), (e), (f), (g) and (h) in the accompanying notes.

The Company uses earnings before Special Items as a key performance
measure of results of the operations for the purpose of evaluating
performance internally and Special Items are not included in any of our
segment results. This non-GAAP measurement is not intended to replace
the presentation of our financial results in accordance with GAAP.
Rather, the Company believes that the presentation of earnings before
Special Items provides additional information to investors to facilitate
the comparison of past and present operations, excluding items in the
quarters and years to date ended December 26, 2015 and December 27, 2014
that the Company does not believe are indicative of our ongoing
operations due to their size and/or nature.

Quarter ended

Year ended

12/26/15

12/27/14

12/26/15

12/27/14

Detail of Special Items

Gains (Losses) associated with the refranchising of equity markets
outside the U.S.(c)

$

(3

)

$

—

$

(96

)

$

7

Costs associated with KFC U.S. Acceleration Agreement(d)

(41

)

—

(72

)

—

Loss associated with planned sale of China aircraft(e)

(15

)

—

(15

)

—

Costs associated with the planned spin-off of the China business and
YUM recapitalization(f)

(9

)

—

(9

)

—

U.S. Refranchising gain (loss)(g)

51

(5

)

75

6

Little Sheep impairment(h)

—

(463

)

—

(463

)

Other Special Items Income (Expense)

—

3

1

3

Special Items Income (Expense) before income taxes

(17

)

(465

)

(116

)

(447

)

Tax Benefit (Expense) on Special Items

(6

)

78

(1

)

72

Special Items Income (Expense), net of tax - including noncontrollng
interests

(23

)

(387

)

(117

)

(375

)

Special Items Income (Expense), net of tax - noncontrolling interests

—

26

—

26

Special Items Income (Expense), net of tax - Yum Brands, Inc.

$

(23

)

$

(361

)

$

(117

)

$

(349

)

Weighted average shares used in computation

439

441

443

453

Special Items diluted EPS

$

(0.05

)

$

(0.81

)

$

(0.26

)

$

(0.77

)

Reconciliation of Operating Profit Before Special Items to
Reported Operating Profit

Operating Profit Before Special Items

$

458

$

422

$

2,037

$

2,004

Special Items Income (Expense) - Operating Profit

(17

)

(465

)

(116

)

(447

)

Reported Operating Profit (loss)

$

441

$

(43

)

$

1,921

$

1,557

Reconciliation of EPS Before Special Items to Reported EPS

Diluted EPS Before Special Items

$

0.68

$

0.61

$

3.18

$

3.09

Special Items EPS

(0.05

)

(0.81

)

(0.26

)

(0.77

)

Reported EPS

$

0.63

$

(0.20

)

$

2.92

$

2.32

Reconciliation of Effective Tax Rate Before Special Items to
Reported Effective Tax Rate

Effective Tax Rate Before Special Items

29.4

%

30.0

%

25.6

%

25.5

%

Impact on Tax Rate as a result of Special Items

2.8

%

(74.1

)%

1.7

%

3.0

%

Reported Effective Tax Rate

32.2

%

(44.1

)%

27.3

%

28.5

%

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Quarter Ended 12/26/15

China

KFC

Pizza Hut

Taco Bell

India

Corporate

and

Unallocated

Consolidated

Total revenues

$

2,048

$

918

$

348

$

608

$

29

$

—

$

3,951

Company restaurant expenses

1,780

559

162

359

25

—

2,885

General and administrative expenses

139

122

90

88

7

82

528

Franchise and license expenses

5

26

14

10

1

40

96

Closures and impairment (income) expenses

42

6

1

—

—

—

49

Refranchising (gain) loss

—

—

—

—

—

(50

)

(50

)

Other (income) expense

(14

)

(1

)

—

(1

)

—

18

2

1,952

712

267

456

33

90

3,510

Operating Profit (loss)

$

96

$

206

$

81

$

152

$

(4

)

$

(90

)

$

441

Quarter Ended 12/27/14

China

KFC

Pizza Hut

Taco Bell

India

Corporate

and

Unallocated

Consolidated

Total revenues

$

2,006

$

1,004

$

352

$

590

$

45

$

—

$

3,997

Company restaurant expenses

1,833

628

173

365

39

1

3,039

General and administrative expenses

132

122

81

57

8

73

473

Franchise and license expenses

5

26

15

5

—

—

51

Closures and impairment (income) expenses

31

7

3

1

—

463

505

Refranchising (gain) loss

—

—

—

—

—

(6

)

(6

)

Other (income) expense

(27

)

—

—

(1

)

—

6

(22

)

1,974

783

272

427

47

537

4,040

Operating Profit (loss)

$

32

$

221

$

80

$

163

$

(2

)

$

(537

)

$

(43

)

The above tables reconcile segment information, which is based on
management responsibility, with our Consolidated Summary of Results.
Corporate and unallocated expenses comprise items that are not allocated
to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among
other amounts, all amounts that we have deemed Special Items. See
Reconciliation of Non-GAAP Measurements to GAAP Results.

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Year Ended 12/26/15

China

KFC

Pizza Hut

Taco Bell

India

Corporate

and

Unallocated

Consolidated

Total revenues

$

6,909

$

2,948

$

1,145

$

1,988

$

115

$

—

$

13,105

Company restaurant expenses

5,712

1,794

550

1,198

105

—

9,359

General and administrative expenses

397

386

266

228

23

204

1,504

Franchise and license expenses

20

85

39

22

5

71

242

Closures and impairment (income) expenses

64

8

3

3

1

—

79

Refranchising (gain) loss

—

—

—

—

—

10

10

Other (income) expense

(41

)

(2

)

(2

)

(2

)

—

37

(10

)

6,152

2,271

856

1,449

134

322

11,184

Operating Profit (loss)

$

757

$

677

$

289

$

539

$

(19

)

$

(322

)

$

1,921

Year Ended 12/27/14

China

KFC

Pizza Hut

Taco Bell

India

Corporate

and

Unallocated

Consolidated

Total revenues

$

6,934

$

3,193

$

1,148

$

1,863

$

141

$

—

$

13,279

Company restaurant expenses

5,812

2,012

557

1,178

122

1

9,682

General and administrative expenses

391

383

246

185

25

189

1,419

Franchise and license expenses

16

80

44

18

2

—

160

Closures and impairment (income) expenses

54

9

5

3

1

463

535

Refranchising (gain) loss

—

—

—

—

—

(33

)

(33

)

Other (income) expense

(52

)

1

1

(1

)

—

10

(41

)

6,221

2,485

853

1,383

150

630

11,722

Operating Profit (loss)

$

713

$

708

$

295

$

480

$

(9

)

$

(630

)

$

1,557

The above tables reconcile segment information, which is based on
management responsibility, with our Consolidated Summary of Results.
Corporate and unallocated expenses comprise items that are not allocated
to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among
other amounts, all amounts that we have deemed Special Items. See
Reconciliation of Non-GAAP Measurements to GAAP Results.

Notes to the Consolidated Summary of Results, Consolidated
Balance Sheets

and Consolidated Statements of Cash Flows

(amounts in millions, except per share amounts)

(unaudited)

(a)

Amounts presented as of and for the quarter and year ended December
26, 2015 are preliminary.

(b)

Other (income) expense for the China Division primarily consists of
equity income (loss) from investments in unconsolidated affiliates.
The quarters ended December 26, 2015 and December 27, 2014 also
include insurance recoveries of $5 million and $25 million,
respectively, related to the 2012 poultry supply incident.

(c)

In 2010 we refranchised our then remaining Company-operated
restaurants in Mexico. To the extent we owned it, we did not sell
the real estate related to certain of these restaurants, instead
leasing it to the franchisee. During the quarter ended June 13, 2015
we initiated plans to sell this real estate and determined it was
held for sale in accordance with GAAP. During the quarter ended
December 26, 2015, we sold the real estate for approximately $58
million. While these proceeds exceeded the book value of the real
estate, the sale represented a substantial liquidation of our
Mexican operations under U.S. GAAP. Accordingly, we were required to
write-off accumulated translation losses associated with our Mexican
business. As such, during the year to date ended December 26, 2015
we recorded charges of $80 million, representing the excess of the
sum of the book value of the real estate and other related assets
and our accumulated translation losses over the sales price.
Consistent with the classification of the original market
refranchising transaction, these charges were classified as
Refranchising Loss within Special Items. Additionally, during the
quarter and year to date ended December 26, 2015 we recognized
Special Items charges of $3 million and $16 million, respectively,
associated with the refranchising of our Pizza Hut Korea
restaurants. The carrying value of the remaining restaurants not yet
sold as of year end is not significant. While additional charges may
occur as the refranchising plans move forward, such charges are not
expected to be material at this time.

(d)

During the first quarter of 2015, we reached an agreement with our
KFC U.S. franchisees that gave us brand marketing control as well as
an accelerated path to improved assets and customer experience. In
connection with this agreement we recognized Special Item charges
for the quarter and year to date ended December 26, 2015 of $41
million and $72 million, respectively, primarily related to the
funding of investments for new back-of-house equipment for
franchisees.

(e)

During the quarter ended December 26, 2015, we initiated plans to
sell an aircraft used in our China Division and determined it was
held for sale, resulting in a write down of $15 million.

(f)

In October 2015 we announced our intent to spin off YUM!’s China
Division from YUM! Brands into a separate independent,
publicly-traded company by the end of 2016. A part of this plan is
to optimize the capital structure of YUM! Brands through the
issuance of new debt that will allow us to return significant
capital to shareholders. During the quarter ended December 26,
2015 we incurred costs of $9 million related to these initiatives.

(g)

During the quarters ended December 26, 2015 and December 27, 2014,
we recorded Special Item gains of $51 million and losses of $5
million, respectively, related to refranchising in the U.S. During
the years to date ended December 26, 2015 and December 27, 2014, we
recorded Special Item gains of $75 million and $6 million,
respectively, related to refranchising in the U.S. Refranchising
gains and losses in the U.S. have been reflected as Special Items
due to the scope of our U.S. refranchising program in recent years
and the volatility in associated gains and losses.

(h)

During the quarter ended December 27, 2014, we recorded an
impairment charge related to Little Sheep totaling $361 million (net
of income tax benefit of $76 million and amounts allocated to
noncontrolling interests of $26 million). This charge was driven by
a write down in trademark from $342 million to $58 million and a
write off of all remaining goodwill of $160 million.